ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 8, Problem 22P
(a)
To determine
To construct:A choice table for interest tables from 0% to 100% assuming doing nothing is allowed.
(a)
Expert Solution
Answer to Problem 22P
From table below, from 0% to 4.7%, Alternative C should be preferred. Between 4.7% to 6.9%; Alternative B should be preferred. Alternative A should be preferred for interest rate between 6.9% to 8.2%.
Explanation of Solution
NPV of Alternative B
NPV of Alternative C
Choice table for interest from 0% to 100%
| Interest rate | (A/P,i,2) | (A/P,i,4) | (P/A,i,8) | A | B | C |
| 0% | 0.500 | 0.250 | 8.000 | 400 | 600 | 850 |
| 1% | 0.508 | 0.256 | 7.652 | 337 | 502 | 693 |
| 2% | 0.515 | 0.263 | 7.325 | 278 | 411 | 546 |
| 3% | 0.523 | 0.269 | 7.020 | 224 | 326 | 409 |
| 4% | 0.530 | 0.275 | 6.733 | 174 | 248 | 280 |
| 5% | 0.538 | 0.282 | 6.463 | 128 | 174 | 158 |
| 6% | 0.545 | 0.289 | 6.210 | 85 | 106 | 44 |
| 7% | 0.553 | 0.295 | 5.971 | 45 | 43 | (63) |
| 8% | 0.561 | 0.302 | 5.747 | 8 | (17) | (164) |
| 9% | 0.568 | 0.309 | 5.535 | (26) | (72) | (259) |
| 10% | 0.576 | 0.315 | 5.335 | (58) | (124) | (349) |
| 11% | 0.584 | 0.322 | 5.146 | (88) | (172) | (434) |
| 12% | 0.592 | 0.329 | 4.968 | (116) | (218) | (515) |
| 13% | 0.599 | 0.336 | 4.799 | (142) | (261) | (591) |
| 14% | 0.607 | 0.343 | 4.639 | (166) | (301) | (663) |
| 15% | 0.615 | 0.350 | 4.487 | (189) | (338) | (731) |
| 16% | 0.623 | 0.357 | 4.344 | (210) | (374) | (795) |
| 17% | 0.631 | 0.365 | 4.207 | (230) | (407) | (857) |
| 18% | 0.639 | 0.372 | 4.078 | (249) | (439) | (915) |
| 19% | 0.647 | 0.379 | 3.954 | (266) | (469) | (971) |
| 20% | 0.655 | 0.386 | 3.837 | (283) | (497) | (1,023) |
| 21% | 0.662 | 0.394 | 3.726 | (298) | (523) | (1,073) |
| 22% | 0.670 | 0.401 | 3.619 | (313) | (548) | (1,121) |
| 23% | 0.678 | 0.408 | 3.518 | (326) | (572) | (1,167) |
| 24% | 0.686 | 0.416 | 3.421 | (339) | (595) | (1,210) |
| 25% | 0.694 | 0.423 | 3.329 | (351) | (616) | (1,252) |
| 26% | 0.702 | 0.431 | 3.241 | (363) | (637) | (1,292) |
| 27% | 0.711 | 0.439 | 3.156 | (374) | (656) | (1,330) |
| 28% | 0.719 | 0.446 | 3.076 | (384) | (675) | (1,366) |
| 29% | 0.727 | 0.454 | 2.999 | (394) | (692) | (1,401) |
| 30% | 0.735 | 0.462 | 2.925 | (403) | (709) | (1,434) |
| 31% | 0.743 | 0.469 | 2.854 | (412) | (725) | (1,466) |
| 32% | 0.751 | 0.477 | 2.786 | (420) | (740) | (1,496) |
| 33% | 0.759 | 0.485 | 2.721 | (428) | (755) | (1,526) |
| 34% | 0.767 | 0.493 | 2.658 | (436) | (769) | (1,554) |
| 35% | 0.776 | 0.501 | 2.598 | (443) | (782) | (1,581) |
| 36% | 0.784 | 0.509 | 2.540 | (450) | (795) | (1,607) |
| 37% | 0.792 | 0.517 | 2.485 | (456) | (808) | (1,632) |
| 38% | 0.800 | 0.525 | 2.432 | (462) | (819) | (1,656) |
| 39% | 0.808 | 0.533 | 2.380 | (468) | (831) | (1,679) |
| 40% | 0.817 | 0.541 | 2.331 | (474) | (842) | (1,701) |
| 41% | 0.825 | 0.549 | 2.283 | (479) | (852) | (1,723) |
| 42% | 0.833 | 0.557 | 2.237 | (484) | (862) | (1,743) |
| 43% | 0.842 | 0.565 | 2.193 | (489) | (872) | (1,763) |
| 44% | 0.850 | 0.573 | 2.150 | (494) | (881) | (1,783) |
| 45% | 0.858 | 0.582 | 2.109 | (499) | (891) | (1,801) |
| 46% | 0.867 | 0.590 | 2.069 | (503) | (899) | (1,819) |
| 47% | 0.875 | 0.598 | 2.030 | (507) | (908) | (1,836) |
| 48% | 0.883 | 0.606 | 1.993 | (511) | (916) | (1,853) |
| 49% | 0.892 | 0.615 | 1.957 | (515) | (924) | (1,869) |
| 50% | 0.900 | 0.623 | 1.922 | (519) | (931) | (1,885) |
| 51% | 0.908 | 0.631 | 1.888 | (523) | (939) | (1,900) |
| 52% | 0.917 | 0.640 | 1.856 | (526) | (946) | (1,915) |
| 53% | 0.925 | 0.648 | 1.824 | (529) | (953) | (1,929) |
| 54% | 0.934 | 0.657 | 1.793 | (533) | (960) | (1,943) |
| 55% | 0.942 | 0.665 | 1.764 | (536) | (966) | (1,956) |
| 56% | 0.951 | 0.674 | 1.735 | (539) | (973) | (1,969) |
| 57% | 0.959 | 0.682 | 1.707 | (542) | (979) | (1,982) |
| 58% | 0.968 | 0.691 | 1.680 | (544) | (985) | (1,994) |
| 59% | 0.976 | 0.699 | 1.653 | (547) | (991) | (2,006) |
| 60% | 0.985 | 0.708 | 1.628 | (550) | (996) | (2,017) |
| 61% | 0.993 | 0.717 | 1.603 | (552) | (1,002) | (2,029) |
| 62% | 1.002 | 0.725 | 1.579 | (555) | (1,007) | (2,039) |
| 63% | 1.010 | 0.734 | 1.555 | (557) | (1,013) | (2,050) |
| 64% | 1.019 | 0.743 | 1.533 | (559) | (1,018) | (2,060) |
| 65% | 1.027 | 0.751 | 1.510 | (562) | (1,023) | (2,070) |
| 66% | 1.036 | 0.760 | 1.489 | (564) | (1,028) | (2,080) |
| 67% | 1.045 | 0.769 | 1.468 | (566) | (1,032) | (2,089) |
| 68% | 1.053 | 0.778 | 1.447 | (568) | (1,037) | (2,099) |
| 69% | 1.062 | 0.786 | 1.427 | (570) | (1,042) | (2,108) |
| 70% | 1.070 | 0.795 | 1.408 | (572) | (1,046) | (2,116) |
| 71% | 1.079 | 0.804 | 1.389 | (574) | (1,050) | (2,125) |
| 72% | 1.088 | 0.813 | 1.371 | (576) | (1,055) | (2,133) |
| 73% | 1.096 | 0.822 | 1.353 | (578) | (1,059) | (2,141) |
| 74% | 1.105 | 0.831 | 1.335 | (579) | (1,063) | (2,149) |
| 75% | 1.114 | 0.840 | 1.318 | (581) | (1,067) | (2,157) |
| 76% | 1.122 | 0.848 | 1.301 | (583) | (1,071) | (2,164) |
| 77% | 1.131 | 0.857 | 1.285 | (585) | (1,074) | (2,172) |
| 78% | 1.140 | 0.866 | 1.269 | (586) | (1,078) | (2,179) |
| 79% | 1.148 | 0.875 | 1.254 | (588) | (1,082) | (2,186) |
| 80% | 1.157 | 0.884 | 1.239 | (589) | (1,085) | (2,193) |
| 81% | 1.166 | 0.893 | 1.224 | (591) | (1,089) | (2,199) |
| 82% | 1.175 | 0.902 | 1.209 | (592) | (1,092) | (2,206) |
| 83% | 1.183 | 0.911 | 1.195 | (594) | (1,096) | (2,212) |
| 84% | 1.192 | 0.920 | 1.181 | (595) | (1,099) | (2,218) |
| 85% | 1.201 | 0.929 | 1.168 | (596) | (1,103) | (2,224) |
| 86% | 1.210 | 0.938 | 1.155 | (598) | (1,106) | (2,230) |
| 87% | 1.218 | 0.947 | 1.142 | (599) | (1,109) | (2,236) |
| 88% | 1.227 | 0.957 | 1.129 | (600) | (1,112) | (2,242) |
| 89% | 1.236 | 0.966 | 1.117 | (602) | (1,115) | (2,247) |
| 90% | 1.245 | 0.975 | 1.105 | (603) | (1,118) | (2,253) |
| 91% | 1.254 | 0.984 | 1.093 | (604) | (1,121) | (2,258) |
| 92% | 1.262 | 0.993 | 1.081 | (605) | (1,124) | (2,264) |
| 93% | 1.271 | 1.002 | 1.070 | (607) | (1,127) | (2,269) |
| 94% | 1.280 | 1.011 | 1.059 | (608) | (1,130) | (2,274) |
| 95% | 1.289 | 1.021 | 1.048 | (609) | (1,132) | (2,279) |
| 96% | 1.298 | 1.030 | 1.037 | (610) | (1,135) | (2,283) |
| 97% | 1.307 | 1.039 | 1.026 | (611) | (1,138) | (2,288) |
| 98% | 1.316 | 1.048 | 1.016 | (612) | (1,140) | (2,293) |
| 99% | 1.324 | 1.057 | 1.006 | (613) | (1,143) | (2,297) |
| 100% | 1.333 | 1.067 | 0.996 | (614) | (1,146) | (2,302) |
(b)
To determine
To construct:A choice table for interest tables from 0% to 100% assuming A, B o r C must be chosen.
(b)
Expert Solution
Answer to Problem 22P
From table below, from 0% to 4.7%, Alternative C should be preferred. Between 4.7% to 6.9%; Alternative B should be preferred. Beyond that Alternative A should be preferred for interest rate between 6.9% to 100%.
Explanation of Solution
NPV of Alternative A
NPV of Alternative B
NPV of Alternative C
Choice table for interest from 0% to 100%
| Interest rate | (A/P,i,2) | (A/P,i,4) | (P/A,i,8) | A | B | C |
| 0% | 0.500 | 0.250 | 8.000 | 400 | 600 | 850 |
| 1% | 0.508 | 0.256 | 7.652 | 337 | 502 | 693 |
| 2% | 0.515 | 0.263 | 7.325 | 278 | 411 | 546 |
| 3% | 0.523 | 0.269 | 7.020 | 224 | 326 | 409 |
| 4% | 0.530 | 0.275 | 6.733 | 174 | 248 | 280 |
| 5% | 0.538 | 0.282 | 6.463 | 128 | 174 | 158 |
| 6% | 0.545 | 0.289 | 6.210 | 85 | 106 | 44 |
| 7% | 0.553 | 0.295 | 5.971 | 45 | 43 | (63) |
| 8% | 0.561 | 0.302 | 5.747 | 8 | (17) | (164) |
| 9% | 0.568 | 0.309 | 5.535 | (26) | (72) | (259) |
| 10% | 0.576 | 0.315 | 5.335 | (58) | (124) | (349) |
| 11% | 0.584 | 0.322 | 5.146 | (88) | (172) | (434) |
| 12% | 0.592 | 0.329 | 4.968 | (116) | (218) | (515) |
| 13% | 0.599 | 0.336 | 4.799 | (142) | (261) | (591) |
| 14% | 0.607 | 0.343 | 4.639 | (166) | (301) | (663) |
| 15% | 0.615 | 0.350 | 4.487 | (189) | (338) | (731) |
| 16% | 0.623 | 0.357 | 4.344 | (210) | (374) | (795) |
| 17% | 0.631 | 0.365 | 4.207 | (230) | (407) | (857) |
| 18% | 0.639 | 0.372 | 4.078 | (249) | (439) | (915) |
| 19% | 0.647 | 0.379 | 3.954 | (266) | (469) | (971) |
| 20% | 0.655 | 0.386 | 3.837 | (283) | (497) | (1,023) |
| 21% | 0.662 | 0.394 | 3.726 | (298) | (523) | (1,073) |
| 22% | 0.670 | 0.401 | 3.619 | (313) | (548) | (1,121) |
| 23% | 0.678 | 0.408 | 3.518 | (326) | (572) | (1,167) |
| 24% | 0.686 | 0.416 | 3.421 | (339) | (595) | (1,210) |
| 25% | 0.694 | 0.423 | 3.329 | (351) | (616) | (1,252) |
| 26% | 0.702 | 0.431 | 3.241 | (363) | (637) | (1,292) |
| 27% | 0.711 | 0.439 | 3.156 | (374) | (656) | (1,330) |
| 28% | 0.719 | 0.446 | 3.076 | (384) | (675) | (1,366) |
| 29% | 0.727 | 0.454 | 2.999 | (394) | (692) | (1,401) |
| 30% | 0.735 | 0.462 | 2.925 | (403) | (709) | (1,434) |
| 31% | 0.743 | 0.469 | 2.854 | (412) | (725) | (1,466) |
| 32% | 0.751 | 0.477 | 2.786 | (420) | (740) | (1,496) |
| 33% | 0.759 | 0.485 | 2.721 | (428) | (755) | (1,526) |
| 34% | 0.767 | 0.493 | 2.658 | (436) | (769) | (1,554) |
| 35% | 0.776 | 0.501 | 2.598 | (443) | (782) | (1,581) |
| 36% | 0.784 | 0.509 | 2.540 | (450) | (795) | (1,607) |
| 37% | 0.792 | 0.517 | 2.485 | (456) | (808) | (1,632) |
| 38% | 0.800 | 0.525 | 2.432 | (462) | (819) | (1,656) |
| 39% | 0.808 | 0.533 | 2.380 | (468) | (831) | (1,679) |
| 40% | 0.817 | 0.541 | 2.331 | (474) | (842) | (1,701) |
| 41% | 0.825 | 0.549 | 2.283 | (479) | (852) | (1,723) |
| 42% | 0.833 | 0.557 | 2.237 | (484) | (862) | (1,743) |
| 43% | 0.842 | 0.565 | 2.193 | (489) | (872) | (1,763) |
| 44% | 0.850 | 0.573 | 2.150 | (494) | (881) | (1,783) |
| 45% | 0.858 | 0.582 | 2.109 | (499) | (891) | (1,801) |
| 46% | 0.867 | 0.590 | 2.069 | (503) | (899) | (1,819) |
| 47% | 0.875 | 0.598 | 2.030 | (507) | (908) | (1,836) |
| 48% | 0.883 | 0.606 | 1.993 | (511) | (916) | (1,853) |
| 49% | 0.892 | 0.615 | 1.957 | (515) | (924) | (1,869) |
| 50% | 0.900 | 0.623 | 1.922 | (519) | (931) | (1,885) |
| 51% | 0.908 | 0.631 | 1.888 | (523) | (939) | (1,900) |
| 52% | 0.917 | 0.640 | 1.856 | (526) | (946) | (1,915) |
| 53% | 0.925 | 0.648 | 1.824 | (529) | (953) | (1,929) |
| 54% | 0.934 | 0.657 | 1.793 | (533) | (960) | (1,943) |
| 55% | 0.942 | 0.665 | 1.764 | (536) | (966) | (1,956) |
| 56% | 0.951 | 0.674 | 1.735 | (539) | (973) | (1,969) |
| 57% | 0.959 | 0.682 | 1.707 | (542) | (979) | (1,982) |
| 58% | 0.968 | 0.691 | 1.680 | (544) | (985) | (1,994) |
| 59% | 0.976 | 0.699 | 1.653 | (547) | (991) | (2,006) |
| 60% | 0.985 | 0.708 | 1.628 | (550) | (996) | (2,017) |
| 61% | 0.993 | 0.717 | 1.603 | (552) | (1,002) | (2,029) |
| 62% | 1.002 | 0.725 | 1.579 | (555) | (1,007) | (2,039) |
| 63% | 1.010 | 0.734 | 1.555 | (557) | (1,013) | (2,050) |
| 64% | 1.019 | 0.743 | 1.533 | (559) | (1,018) | (2,060) |
| 65% | 1.027 | 0.751 | 1.510 | (562) | (1,023) | (2,070) |
| 66% | 1.036 | 0.760 | 1.489 | (564) | (1,028) | (2,080) |
| 67% | 1.045 | 0.769 | 1.468 | (566) | (1,032) | (2,089) |
| 68% | 1.053 | 0.778 | 1.447 | (568) | (1,037) | (2,099) |
| 69% | 1.062 | 0.786 | 1.427 | (570) | (1,042) | (2,108) |
| 70% | 1.070 | 0.795 | 1.408 | (572) | (1,046) | (2,116) |
| 71% | 1.079 | 0.804 | 1.389 | (574) | (1,050) | (2,125) |
| 72% | 1.088 | 0.813 | 1.371 | (576) | (1,055) | (2,133) |
| 73% | 1.096 | 0.822 | 1.353 | (578) | (1,059) | (2,141) |
| 74% | 1.105 | 0.831 | 1.335 | (579) | (1,063) | (2,149) |
| 75% | 1.114 | 0.840 | 1.318 | (581) | (1,067) | (2,157) |
| 76% | 1.122 | 0.848 | 1.301 | (583) | (1,071) | (2,164) |
| 77% | 1.131 | 0.857 | 1.285 | (585) | (1,074) | (2,172) |
| 78% | 1.140 | 0.866 | 1.269 | (586) | (1,078) | (2,179) |
| 79% | 1.148 | 0.875 | 1.254 | (588) | (1,082) | (2,186) |
| 80% | 1.157 | 0.884 | 1.239 | (589) | (1,085) | (2,193) |
| 81% | 1.166 | 0.893 | 1.224 | (591) | (1,089) | (2,199) |
| 82% | 1.175 | 0.902 | 1.209 | (592) | (1,092) | (2,206) |
| 83% | 1.183 | 0.911 | 1.195 | (594) | (1,096) | (2,212) |
| 84% | 1.192 | 0.920 | 1.181 | (595) | (1,099) | (2,218) |
| 85% | 1.201 | 0.929 | 1.168 | (596) | (1,103) | (2,224) |
| 86% | 1.210 | 0.938 | 1.155 | (598) | (1,106) | (2,230) |
| 87% | 1.218 | 0.947 | 1.142 | (599) | (1,109) | (2,236) |
| 88% | 1.227 | 0.957 | 1.129 | (600) | (1,112) | (2,242) |
| 89% | 1.236 | 0.966 | 1.117 | (602) | (1,115) | (2,247) |
| 90% | 1.245 | 0.975 | 1.105 | (603) | (1,118) | (2,253) |
| 91% | 1.254 | 0.984 | 1.093 | (604) | (1,121) | (2,258) |
| 92% | 1.262 | 0.993 | 1.081 | (605) | (1,124) | (2,264) |
| 93% | 1.271 | 1.002 | 1.070 | (607) | (1,127) | (2,269) |
| 94% | 1.280 | 1.011 | 1.059 | (608) | (1,130) | (2,274) |
| 95% | 1.289 | 1.021 | 1.048 | (609) | (1,132) | (2,279) |
| 96% | 1.298 | 1.030 | 1.037 | (610) | (1,135) | (2,283) |
| 97% | 1.307 | 1.039 | 1.026 | (611) | (1,138) | (2,288) |
| 98% | 1.316 | 1.048 | 1.016 | (612) | (1,140) | (2,293) |
| 99% | 1.324 | 1.057 | 1.006 | (613) | (1,143) | (2,297) |
| 100% | 1.333 | 1.067 | 0.996 | (614) | (1,146) | (2,302) |
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Chapter 8 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 8 - Prob. 1QTCCh. 8 - Prob. 2QTCCh. 8 - Prob. 3QTCCh. 8 - Prob. 4QTCCh. 8 - Prob. 5QTCCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5P
Ch. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45P
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- Present worth is an equivalence method of analysis in which a project's cash flows are discounted to a single present value. True or false?arrow_forwardA City is considering a replacement for its police radio. The benefits and costs of the replacement are shown below. • Purchase Cost: $7,200 • Annual Savings: $1,500 • Annual Costs: $300 • Life: 15 years What is the replacement’s benefit-cost ratio if the effective annual interest rate is 8%? Please present the procedures of your calculation.arrow_forwardFor each of the following problems, (a) draw the cash flow diagram (as needed); (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. A process for producing the mosquito repellant Deet has an initial investment of $200,000 with annual costs of $50,000. Income is expected to be $90,000 per year. What is the simple payback period? What is the compounded payback period at an interest rate of 12%? no excelarrow_forward
- Please do not give solution in image format thanku Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,500,000,has annual operating and maintenance costs of $800,000, and requires overhauls every 5 years at a cost of $1,250,000.Design B is more sophisticated, including computer controls; it has an initial cost of $5,750,000, has annual operatingand maintenance costs of $600,000, and requires overhauls every 10 years at a cost of $3,000,000. Using a 5 percent/year interest rate, determine the capitalized cost for each design and recommend which should be chosenarrow_forwardA piece of new equipment has been proposed by engineers to increase theproductivity of a certain manual welding operation. The investment cost is$25,000, and the equipment will have a market value of $5,000 at the endof a study period of five years. Increased productivity attributable to theequipment will amount to $8,000 per year after extra operating costs havebeen subtracted from the revenue generated by the additional production.A cash-flow diagram for this investment opportunity is given below. If thefirm’s MARR is 20% per year, is this proposal a sound one? Use the PWmethod.arrow_forwardA manufacturer purchased $15,000 worth of equipment with a useful life of six years. Assuming 12% interest, the equivalent uniform annual cost of the equipment is _________. A. $1,625 B. $1,252 C. $2,500 D. $3,648 E. $5,049 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.arrow_forward
- You are weighing the economics of installing a triple-glazed energy efficient window system in your building. The following life cycle costs and savings are provided. The study period is 25 years, and the discount rate is 10%. Is this an economically viable approach based on the Savings-to-Investment Ratio (SIR)? Triple- Glazed Energy Efficient Windows: Window Quantity takeoff: 10000 sf Initial Cost: $100/sf Annual Operating Costs: $2.5/sf Annual Energy Saving: $10/sfarrow_forwardthe potential percent gain or loss in changes of variable is taken into account by A. Break even analysis b. Cost benefit analysis c. Present worth analysis d. Sensitivity analysisarrow_forwardA steel highway bridge must either be reinforced or replaced. Reinforcement would cost Rs. 6,60,000 and would make the bridge fit for an additional five years of service. If it is reinforced, it is estimated that its net salvage value would be Rs. 4,00,000 at the time it is retired from service. The new prestressed concrete bridge would cost Rs. 15,00,000 and would meet the foreseeable requirements of the next 40 years. Such a bridge would have no salvage value. It is estimated that the annual maintenance cost of the reinforced bridge would exceed that of the concrete bridge by Rs. 96,000. If the bridge is replaced by a new prestressed concrete bridge, the scrap value of the steel would exceed the demolition cost by Rs. 4,20,000. Assume that the money costs the state 10%. What would you recommend?arrow_forward
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